New Emigrant Direct Credit Card

There have been rumors if this for a long time, but Emigrant Direct has finally announced their new credit card. This is a “platinum” MasterCard that offers up to 1.25 percent cash back on all purchases with no yearly limit. The rewards are deposited directly into your Emigrant Direct account twice a year.

If you have an average daily balance (for the last six months) of $10,000 in your Emigrant Direct savings account, you qualify for the 1.25 percent cash back rate. If you don’t have that average daily balance, your cash back rate is only 0.5 percent. (Thanks to fivecentnickel for pointing out this stipulation.)

I’ve had an Emigrant Direct savings account for nine months, and I have had none of the problems that some people speak about. The sign-up process was a little long, but nine months later, that is my only complaint.

Emigrant Direct does not offer the highest interest yield anymore, but the combination of the relatively high APY and the credit card rebates may be enough to win over more customers.

The credit card I use is a CitiBank Dividend Platinum Select MasterCard. To compare, the CitiBank card offers 1 percent back on all purchases and 5 percent back on purchases at supermarkets, drug stores, and gas stations. However, your cash is not automatically deposited — you have to request a rebate check every so often, so you’re missing out on (taxable) interest while the money is held by CitiBank.

February 1, 2006 Update: The CitiBank card now offers 2% cash back rather than 5%.

The Emigrant Direct card would be more worthwhile if the rewards were deposited immediately. Since they are only deposited twice a year, the bank, like CitiBank, is earning interest on your cash while you’re not.

Check that minimum balance clause… If you dip below an average daily balance for just one day during the six months prior to reward deposition, your cash back drops to 0.50% of net purchases. It’s not 1.25%. It’s UP TO 1.25%.

I was stoked about picking up one of these cards until you mentioned that balance minimum. This seems rather pointless for a lot of people when you can easily get a regular card that offers 1% back and then just use HSBC to get a higher savings account rate than ED. Oh well!

I will be sticking with my Citibank card since it pays a higher %. If I get close to the $300/yr limit, I might consider getting another reward card. I have also already transferred my funds from ED to ING.

I am glad to have my ED account @4.% although ING’s 4.75 is in my near future,but for cash back my AMEX Cash Rebate and Discover Platinum cards pay well especially DPC when you can double your rewards when you spend at certain partners stores/web sites.

The ED card is exactly what I needed. I was hitting the roof on my Citi card, and it’s nice not to constantly think about what defines a supermarket. The constent 1.25 makes my life easier. Plus, i’m sure ED will raise its rate if the Fed hikes rates next week.

I think you are wrong about the (taxable) comment above – I’ve read elsewhere that credit card cash back is treated by the IRS as a “reduction of purchase cost” and not interest – this is why you don’t receive a 1099-INT from your credit card company. It isn’t considered taxable income.

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